Use the Table for the Question(s)below

question 11

Multiple Choice

Use the table for the question(s) below.
Consider a project with the following cash flows in $:
-Assume the appropriate discount rate for this project is 15%.The profitability index for this project is closest to:

• A).14.
• B).22.
• C).60.
• D).15.

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Definitions:

Underwriting Spread

The underwriting spread is the difference between the amount underwriters pay to the issuer in a securities offering and the price at which the securities are sold to the public, serving as compensation for the underwriters.

Issue Costs

Costs related to the creation of new securities, encompassing fees for underwriting, legal services, and registration.

Stock Price

Stock price is the amount of money required to purchase a share of a company's stock, fluctuating based on supply, demand, and market sentiment.

Subscription Price

The cost at which existing shareholders can purchase additional shares in a company, often at a discount during a rights issue.